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MELBOURNE - The Australian share market closed lower today despite a positive lead from US markets and the United States central bank's rescue of global insurer American International Group (AIG).
At the 1615 AEST close, the benchmark S&P/ASX200 index had fallen 28.6 points, or 0.6 per cent, to 4722.2, while the broader All Ordinaries index was down 30.1 points, or 0.63 per cent, to 4769.7.
The September share price index futures contract was 17 points lower at 4732, on a volume of 66,448 contracts, according to preliminary calculations.
ABN Amro Morgans private client adviser Trent Muller said the local market started positively today but turned south in the afternoon, led by futures trading.
"There's a bit of nervousness about how the US market will treat the AIG rescue. AIG is a Dow (Dow Jones Industrial Average index) component," Mr Muller said.
"It will most certainly be down tonight as a result of the dilution of shareholders' equity and that will potentially offset some upside on other financials."
He said investors were also asking themselves which company would be next to find itself in trouble.
"Most people are still very defensive in their investment policies these days, and they're waiting for a clear sign that we're reaching the bottom."
The US Federal Reserve today announced it would provide AIG with an US$85 billion (A$107.08 billion) rescue loan to save it from bankruptcy amid fears of a catastrophic meltdown of financial markets.
Global markets have been in turmoil this week, following US investment bank Lehman Brothers filing for bankruptcy, the fire sale of rival Merrill Lynch and concerns over the financial viability of AIG.
Australia's big insurers said today they had no or minimal exposure to AIG.
QBE Insurance Group added 89 cents to $24.12, AXA Asia Pacific firmed three cents to $5.15, Insurance Australia Group strengthened seven cents to $4.16, and Suncorp-Metway dipped 29 cents to $8.86.
Among the major banks, the National Australia Bank dumped $1.20 to $20.70, Westpac reversed 25 cents to $23.01, ANZ retreated 36 cents to $16.00 and the Commonwealth Bank descended 60 cents to $41.10.
Investment bank Macquarie Group fell $2.87 to $33.93 despite saying it remained well funded and capitalised.
In the resources sector, global miner BHP Billiton was off 75 cents at $35.65 as it completed a supply contract that will underpin the US$400 million (A$503.91 million) expansion of the Greater Angostura gas project off the Trinidad coast.
Rio Tinto shed $4.85 to $102.00.
Oil and gas producer Woodside Petroleum found 70 cents at $51.06, and Santos picked up 26 cents at $18.00.
Mid-tier gas producer Molopo Australia sagged eight cents to $1.04 as it reported a modest annual loss.
On Wall Street overnight, the Dow Jones lifted 141.51 points, or 1.3 per cent, to 11,059.02.
In the gold sector, Newmont was 15 cents richer at $4.98, Newcrest eased six cents to $21.39, and Lihir put on 17 cents at $2.14.
The price of gold in Sydney at 1626 AEST was US$780.85, up US$5.45 on yesterday's close of US$775.40.
Among media stocks, News Corp weakened 14 cents to $17.09, and its non-voting scrip backtracked 23 cents to $16.76.
Consolidated Media lost six cents to $2.93, and Fairfax dropped seven cents to $2.77.
Telco Telstra slipped three cents to $4.14, and Optus-owner Singapore Telecommunications scraped off one cent to $2.82.
In the retail sector, Wesfarmers, which owns Coles, was 57 cents lower at $28.63, and Woolworths gained 13 cents to $28.40.
Among other stocks, online advertiser Seek was up eight cents at $5.24 after it took a stake in a South-East Asian employment website provider, its second investment in Asia.
The top-traded stock by volume was Telstra, with 45.8 million shares worth $192 million changing hands.
Preliminary national turnover was 1.52 billion shares worth $6.96 billion, with 614 stocks down, 420 up and 314 unchanged.
- AAP
